Say the 1% 10y $100 bond is now worth $80 and there are now 5% bonds available. Say the monkey NFT is down from $100 to $80. The monkey NFT could be sold and 5% bonds could be bought, which will also pay out >$100 eventually.

The second bank has just bought - because it has enough money to do so selling its NFT or whatever - the same bonds that SVB has.

There is no difference at all between the assets of liabilities and the two banks in this example. I don’t mean just that the amounts are the same: every asset is identical.

Can both use the “I have the money but just not right now” excuse or not?

> every asset is identical.

You lost me there.

> Can both use the “I have the money but just not right now” excuse or not?

No.

Bank 1 starts with $1000 in t-bills and $1000 in t-bonds (face value $1000)

The bonds lose 20% (for simplicity the t-bills gain 0%)

Bank 1 ends with $1000 in t-bills and $800 in t-bonds (face value $1000)

According to some people Bank 1 can say “I have $2000 it’s just that I don’t have them right now”

Bank 2 starts with $1800 in t-bills and $200 in NFTs

In the same period the NFTs lose 100%

Bank 2 still has $1800 in t-bills, sells $800 and buys $800 of those t-bonds which are trading at a 20% discount to par

Bank 2 ends with $1000 in t-bills and $800 in t-bonds (face value $1000)

Bank 1 and Bank 2 are in the same exact situation

Bank 1 can say “I have $2000 it’s just that I don’t have them right now” but Bank 2 cannot do the same?